How to collect damages if trustee hides assets?

Trustee Damages

Collecting damages from a trustee who has hidden or misused trust assets is totally possible—but it takes a strategic combo of legal action, documentation, and often court involvement. Here’s how to go after it:

💥 Step-by-Step: Collecting Damages from a Trustee Who Hides Assets

1. Gather Evidence of the Hidden Assets

Start with anything you can prove:

  • Transactions without explanation
  • Real estate sold or transferred below market value
  • Trust property “loaned” or transferred to the trustee or their family
  • Missing accountings or gaps in records

👉 Get creative: Use public records (like deeds), tax records, or bank statements tied to trust activity.

2. Demand a Full Accounting

Send a formal demand letter for:

  • A full accounting from the date of suspected misconduct
  • All bank records, real estate sale details, and financial statements

If the trustee refuses or delays, proceed to court. A letter like the one I helped you with earlier sets this up.

3. File a Petition in Probate Court

Ask the court to:

  • Compel an accounting
  • Remove the trustee
  • Appoint a neutral forensic accountant or successor trustee
  • Surcharge the trustee (force repayment of losses)

You can also request a constructive trust, which freezes or recaptures assets the trustee improperly transferred to themselves or others.

4. Request a Forensic Accounting

The court can authorize a forensic audit of the trust’s financial history—especially if you show signs of hiding, fraud, or missing assets.

This often uncovers:

  • Hidden bank accounts
  • Undisclosed sales or gifts
  • Underreported income from rental properties

5. Pursue a Surcharge Action

A surcharge means the trustee must personally repay any financial harm they caused the trust. Courts will grant it if you show:

  • Losses from mismanagement
  • Unauthorized use of funds
  • Personal gain at the trust’s expense

6. Explore Additional Remedies

If it’s really egregious, you may also be entitled to:

  • Interest on stolen or misused funds
  • Punitive damages (in cases of fraud or elder abuse)
  • Legal fees reimbursed from the trustee personally (not trust funds)

7. Use Discovery Tools if Litigation Begins

Once you’re in court, you can:

  • Subpoena bank statements, emails, tax returns
  • Depose the trustee and third parties (like realtors or accountants)
  • Uncover paper trails of asset movement

This is where a probate litigation attorney can go full-throttle.

🧠 Pro Tip: Hidden Doesn’t Mean Lost

Trustees often hide things thinking they can get away with it—but if you shine a light through discovery, those assets can be brought back into the trust, and the trustee can be held personally liable.